Is Homeownership Overrated? Smart Girl Dumb Questions with Nayeema Raza

13:08Nicole Lapin:No, it really, it does require discipline. And if you know you're not going to do that, then home ownership is a great forced savings vehicle. Over time, at the end, you're going to make three to 5%. You're not going to make seven to 10%. Typically speaking, do not come for me. There are markets, there are things. I know. But I was just looking at the data.

13:28Nayeema Raza:Yeah, you're taking aggregate data. This is so interesting. So this is like the third episode in the Smart Girl, Dumb Questions, Smart Money series that I'm doing, which is sponsored by Time. The first episode I talked to the divorce attorney and he talked about this idea of you have to have a naked lunch with yourself and really know your own finances and your own approach to money before you kind of pair up with someone. I would say something you should do individually is have what I would call a naked lunch, like where you really look at what's at the end of your fork. Like, like the most dangerous lies in relationship are the lies.

13:58Nayeema Raza:The image in my head is so fucked up right now. I'm just imagining a naked person looking at a fork. Looking at the end of their fork. Okay.

14:04Nicole Lapin:I mean, listen, whatever the metaphor does for you, it's fine. You know, it tells more about you than me.

14:08Nayeema Raza:It's a Rorschach test of sorts. I think what happens economically is the most dangerous lies are the lies we tell ourselves. Yeah, totally.

14:18Nicole Lapin:And I would even say, cause I talk about the idea of looking at your finances is like sitting in front of the mirror naked eating, but also putting fluorescent lights on yourself. Oh, gosh. To be really, really honest. Nobody wants to do that.

14:29Nayeema Raza:Nobody wants to have this meal with anybody, maybe. Although, it sounds a little bit like Vegas. Okay. The second episode was with Raj Chetty, who's done a lot of work around the American dream. So, there's a lot of debate nowadays about people renting versus buying. Yeah. One way you can actually get to the American dream is to rent a home in a neighborhood that offers better opportunities for kids, better schools, better pathways to jobs, et cetera. From the perspective of homeownership, I guess that's not achieving the American dream. From the broader perspective of achieving prosperity, that might actually be a smart thing to do.

15:04Nayeema Raza:Your zip code matters more than your deed. Literally, exactly, whether you own a house or not. And we talked about what is the best path to progress and what is not propaganda, but like is a lore or a myth around progress and homeownership being part of the second category of like, it's been this version, this temple of the American dream, a home you own, a white picket fence, two and a half kids, whatever it is. And that's just, that's not getting people to the amount of progress that they hope to feel. And I think that's definitely true in our generations.

15:34Nicole Lapin:There are emotional factors to it. And if it makes you sleep better at night, then that's amazing. But just be really, really honest that that's the reason. Yeah. How did you emotionally get over it? Money. money. You did the math. The math got you over it. Yeah. I think when you have a lot of these hard conversations and emotions swell up, and if you're working with a partner who also has emotions around it, I think if you go back to the numbers, for us, it was most important to optimize for net worth after 30 years. Not right now.

16:01Nayeema Raza:How do you look at like homes that have renovations? Because I feel like a lot of people are buying like fixer uppers nowadays, and then they're getting a couple of things. They're getting a roof over their heads. They're getting some project that is either going to make or break their marriage together. They might be getting content. Like they create channels where they're just like renovating these homes. But there's so much of like a renovation culture.

16:22Nicole Lapin:Yeah, that's not my life.

16:24Nayeema Raza:That scares the hell out of me.

16:26Nicole Lapin:Well, you know, that's been popularized obviously by HGTV and you think you can flip. And that's not what we're talking about here. We're talking about typically what you're going to be spending on those property taxes is around, again, 1%. Every area is going to be different. And then, you know, whatever typical maintenance you're going to have, the roof needs fixing, the HVAC system goes out. I mean, you just need to remember that at that point when you become a homeowner, nobody is coming to fix that stuff. And that stuff is very, very expensive. And insurance costs don't even get me started.

17:00Nayeema Raza:And there's also home warranties and home insurance. Is like a home warranty worth it?

17:03Nicole Lapin:It's worth it for the companies that sell it.

17:05Nayeema Raza:Yeah. I mean, that's very telling.

17:07Nicole Lapin:If you look at insurance, you want to insure stuff that you cannot afford to lose. Your life, your health, your home. The other stuff, like a warranty on a toaster, you know, the extended cell phone coverage, all that stuff is being sold because it's very lucrative to the company.

17:22Nayeema Raza:It's insane. Like, it's like the idea of like when you buy an Amtrak ticket, they're like, do you want insurance for this ticket? It's like, no, like that's insane. Buy a refundable ticket.

17:30Nicole Lapin:Historically, it doesn't work out well for the consumer.

17:33Nayeema Raza:So you've obviously gone through a big shakeup in your life. 18 months ago or so. The fire is in LA and you lost your home. Did that change your philosophy on all of this and on the idea of ownership in general?

17:47Nicole Lapin:Yeah, it reminded me that, you know, systems, huge city systems, state systems can fail in a way that felt very uncomfortable for me at the time. I was also two weeks postpartum. So I was extremely emotional. You know, we built out a nursery. We built out a home that I'm mostly more in the future of, not necessarily even the past of. And so I think that when that happened so quickly and so obviously unexpectedly, it made me less attached to a physical home and that idea of stability that I glorified for so many years. And I thought, okay, well, when I become this, then I'll be happy, right? We always play this game and we never get our brains to the other side of it because there's always another there there.

18:40Nicole Lapin:So when I get a home, when I get married, when I have a kid, then I'll be happy. And, you know, the truth is wherever you go, there you are. And there's always going to be, maybe not to that extent, there's always going to be something that happens that's going to get in the way of what you imagined that time to be. It was not the plan, but it also made me less attached to this idea of home ownership. I can't imagine.

19:04Nayeema Raza:And I don't want to make you relive that very difficult experience. One of my closest friends lived in LA, had a home in the Palisades. Her son is my godson, and they lost their home. And I'd seen her really spend a lot of time picking that lot, designing that home. It was a special place. It felt like my home in LA. And so seeing that, I totally understand what you're saying about losing confidence in the idea of stuff and the physical world, but also in some of the institutions that we're still finding out like why this happened and where the accountability lies and how to pursue that. I'm certainly seeing that in my friend's experience.

19:46Nicole Lapin:I remember leaving that day and just thinking we would come back. I just left with the clothes on our back. We put the dog in the car and the baby and we're like, it's cool. We'll be back later. We were going to go to a friend's house. And then, you know, how could they let this burn down? And also my husband was like, yeah, and I just paid so much in taxes. Like, we're good. The trucks are on their way. Like I paid for the fire hydrant stuff. No, none of it was there. And so that's really unnerving on so many levels that the systems that you expect to be there when you need them the most aren't.

20:16Nicole Lapin:But yes, Rick Russo was our first guest here, which was felt very poetic and fitting. to, yeah, rebuild the office and the studio.

20:26Nayeema Raza:And yeah, well, you've, I mean, I'm sitting here in Nicole's beautiful studio and it's stunning. Thank you for letting us. Thank you. And it's just, I mean, you've rebuilt a lot.

20:35Nicole Lapin:Thank you. The idea of renting like feels good to me on a financial and an emotional level because of that.

20:42Nayeema Raza:Yeah. I cannot compare with that experience, but I will just say like one of the reasons I've always been a renter is because one, I've grew up in multiple continents. Like I've always moved a lot. I've lived in a dozen cities in like as many years or in 15 years, I've lived in a dozen cities. And I like the idea that when the washing machine breaks, I call somebody and I don't spend hours of my life on it. And there's a huge value of that to me that I cannot put in. I could probably like figure out the marginal utility calculation on it. But for me, it's just it's liberating to not have to deal with those things.

21:15Nicole Lapin:Yeah, if you're moving around like Gen Z and millennials are, it is more advantageous to rent. I think the idea that there's so much shame, once you tease through some of these issues and you get to a point where this is an intentional decision. I, Naima, move around a lot. I, Naima, am being disciplined that I'm investing in the market, you know, and I'm consciously choosing to rent so that I can free up more of my capital to grow faster for me. You know, that's a different mindset than saying like, oh, I'm such a loser. I'm renting. I'm stuck at life. Like, what am I going to tell the Pakistani ladies at the next?

21:52Nicole Lapin:The aunties. You don't know these aunties.

21:55Nayeema Raza:Nicole, I'm telling you. These aunties.

21:57Nicole Lapin:It's about you getting good with that conversation with yourself.

22:01Nayeema Raza:We're going to take a quick break and we'll be back with more with Nicole Lappin.

22:09Nayeema Raza:I think of you as someone who's like extremely resilient, not just because we're sitting in this beautiful office that you've rebuilt, but also because of the story that you have told around having been in debt and getting out of debt. And so before we move on totally from this home chapter, it's like one of the daunting things to me about homeownership is the idea of debt. And even if you have a fixed interest mortgage, which I don't think they exist anymore, kind of, or they do, but they're at much higher interest rates than they were years ago, right? No? You can correct me. No, that's the whole idea.

22:41Nayeema Raza:Yeah. I am allowed to be dumb on my show. Yeah. Nicole's giving me a sad face. Do you mean adjusted, adjustable rate mortgage? There are adjustable rate mortgages. But they used to be much lower percentages.

22:52Nicole Lapin:Yeah.

22:53Nayeema Raza:The interest rate. On the interest rate. Yes, exactly. Totally.

22:55Nicole Lapin:When interest rates were lower. Yes. And now we're about six and a quarter percent. You know, obviously we were at rock bottom interest rates around the pandemic and when we saw financial Armageddon in 2008, but that was an emergency measure. So those rock bottom interest rates were what people got used to, but they're not typical. We're at more of a typical interest rate level right now.

23:19Nayeema Raza:So given the choice, I know that you're not going to buy a home anytime soon. It sounds like I'm not going to buy a home anytime soon, although I do have to have like a very naked fluorescent lunch with myself and figure out how much money I should be putting in the market because I'm not buying a home. That's my kind of homework. We can do that. Yeah, we can do that together. Yeah. It would help me do that. I'll have naked lunch with you. Wow. I love it. That's great. That would be amazing. It is so scary. And I even find myself punting meetings with my wealth manager because I'm just afraid to confront numbers.

23:49Nayeema Raza:And they're not bad. I'm pretty good at saving and I'm pretty good at investing, but I just don't want to think about it. Yeah.

23:56Nicole Lapin:We make up a lot of stories in our head that end up taking over. And the best antidote for shame is truth and looking at it and realizing actually I suffered more in imagination than in reality.

24:09Nayeema Raza:That's like a stoicism vibe for you. Okay. All right. I love that we're now on Ryan Holiday's podcast. We're doing the Daily Stoic. If you were considering, even though neither of us are buying this home, we're just having naked lunch, would you be like less likely to take a fixed interest rate loan for a mortgage right now? Or what would you advise people? Like, is there a hope that interest rates are going to come down? Like, do you have a theory on that? I know you're not giving financial advice, all the disclosures, but is there a way to think about that?

24:36Nicole Lapin:Yeah. Well, we also do have these conversations at our wealth management, firm private wealth collective, and this is truly a holistic approach. So you can't really look at homeownership in a vacuum. You have to look at your entire financial picture. You know, people often say like, can I buy a home? It's like, hold on a second. I have a thousand other questions for you. Like what, what other kinds of debt are you holding? Do you have student loans? Do you have credit card interest rate? You know, what are your goals? And, and, and all of those questions should be looked at together in a holistic picture.

25:08Nicole Lapin:And so not all debt is created equal. So I used to be so scared of any kind of debt. I'm first generation American, you know, grew up in a great immigrant household. Like you buy something if you have the literal cash to pay for it. And that was the end, like period, end of story. And so I used to - That is keeping people

25:25Nayeema Raza:poor.

25:26Nicole Lapin:So rich people have debt, but they call it leverage. It's the same concept, but they use it to make more money or lower their cost of capital, which is essentially taking the difference between the percentage that you're borrowing money at and the percentage that you would make money at. So if you're borrowing at 3%, but you can make 10%, then you're pocketing that spread or 7%, for instance. And so, you know, good debt and bad debt, two different things. So good debt for your beautiful, beautiful brain, you know, in theory, that asset is going to earn more than the interest rate, right? Yes. So that's good debt.

26:05Nicole Lapin:Or you're using that debt to buy assets that will appreciate. So a home. It's sort of, you know, we're six and a quarter percent. Again, that calculation that we did around the 5 % is more like 6%, maybe 7 % in today's interest rate environments. And credit card debt, bad debt, right? Credit card debt that I got into was 24%. So right now, new credit issues are coming in at 22%, 24%. You miss payments, you're up to 30%.

26:42Nayeema Raza:And did you know that? Like, had you read these, like, because I feel like there's always asterisks and then the star, and then they have these other, like, insignia for the footnotes. Totally. And they come up with every character under the sun.

26:51Nicole Lapin:And if you don't know, you don't have perspective. 24 % amazing compared to what? You don't know.

26:58Nayeema Raza:You don't know. And it's all these, like, hidden, is it hidden fees? Or it's, like, it's just, like, lightly fine printed fees. I don't know. Yeah.

27:05Nicole Lapin:So APR is the interest rate that you pay. APY is what you get at the bank. What you get at the bank typically is much lower than what you're paying a credit card. And that type of debt is what can snowball out of control. The biggest issue with that type of debt is the minimum payment. It's not even necessarily the rate. If you can understand what that rate is or pay it off on time, but the minimum payment thing is what's keeping a lot of people stuck. It kept me stuck. I thought, okay, I'm paying the minimum payment. This is an option on the credit card portal. I got into credit card debt when I finally got a credit card and I was rebelling against, you know, not ever having one or stashing cash under the sink behind the maxi pads just in case.

27:48Nicole Lapin:That's just how I grew up. But using that type of, I think, predatory lending can get you really, really stuck. So$5 ,000 at 20%, which is not even the highest, by paying just the minimum will take you 23 years to pay it off and almost double what you're spending in interest.

28:12Nayeema Raza:Wow.

28:13Nicole Lapin:So when you're thinking about debt, like you have to think about two different kinds of debt and what the percentage is. Right. And what you're doing with that. Are you buying things? Are you buying a depreciating asset with it? And you're using high interest credit card debt versus your brain.

28:28Nayeema Raza:Yeah. Hopefully, lower interest rate. Hopefully, outperforming inflation unless you decide to become a documentary filmmaker, in which case, probably not. But that's fine. It's psychic income. How much debt did you get into? I got into$5 ,000 of credit card debt originally.

28:44Nicole Lapin:I broke that down by the day to get out of it. I didn't know at the time that I was doing the avalanche method. Yes. There's two ways you talk about to get out of debt. Yep. Avalanche method and snowball method. So it doesn't really matter which one you choose as long as you choose one and stick to it. So avalanche, you know, no, no, I want you to tell them.

29:05Nayeema Raza:I don't know.

29:05Nicole Lapin:I don't want to be in snow at all.

29:07Nayeema Raza:I'm like, this sounds terrible. Let's get inside.

29:10Nicole Lapin:Yes. So avalanche method is ranking your highest interest rate credit card debt first and paying that off the first. So if you have, you know, a bill that comes in for$100 and that's at 5%, let's say, and you have a bill that's for$50 and it's at 24%, you're like, I have a magical$100 bill. I'll just pay the$100 one off, right? Because I'll rip it up. It'll be cathartic. But that's not the most advantageous way. I would put, you know, half of that toward paying off the higher interest rate credit card debt likely first, because that's going to snowball fastest, even though the snowball method is paying for the smallest bill first so you can have momentum to keep going.

29:59Nicole Lapin:So it's like snowball method is psychological and avalanche method is like more efficient. Yeah. And again, I give these choices because not every financial choice is a true numbers choice. It's often an emotional choice. So whatever you're going to stick to, you're going to spend more over time. But as long as you stick to that and it works for you, then I like that method for you.

30:22Nayeema Raza:I like that too.

30:22Nicole Lapin:But the one that's cheaper is the avalanche. Yeah.

30:26Nayeema Raza:The efficient one is the avalanche one. And I so agree with you on the emotionality of it. like Jim Sexton and I were talking about this, the divorce attorney and I, like when you date somebody, you're not dating their approach to money. You're dating like their parents and grandparents approach to money. And all of this stuff is so hard-coded in us that it's really hard to separate the emotionality and the finance. And I love what you do because it's partly extremely practical and partly psychological.

30:50Nicole Lapin:And thank you so much. But when I was in debt and I continued to, you know, be in debt and feel a lot of shame around that debt, especially when I was also a business reporter and I was covering these macro economic things. But personally, in my own micro economy, I couldn't get my own financial shit together. You know, I felt so much shame around that. I felt so much shame about the lineage too, because I was like, well, I clearly deserve this. I suck. I'm not a numbers person. I'm bad with money. Of course, this is going to happen to me. And then these stories that continue to proliferate And shame is not a good money management system because it keeps you avoidant.

31:30Nicole Lapin:It keeps you out of these conversations that really could be helping you. And so I think it's a mistake to remove the idea that shame has a huge part in what's keeping people in a cycle of debt.

31:44Nayeema Raza:That's so well put. I am now going to completely lowbrow your conversation about shame and pull out paddles. Something else to put in the room. I brought these paddles into Nicole's studio and she's terrified and confused as to why I have brought this. She thought we're going to be up to something sexier than we are going to be. So, okay.

32:01Nicole Lapin:It's like, am I going to get spanking here? What's happening? No, no spanking.

32:05Nayeema Raza:There's nothing to be ashamed of. But I want to run through kind of big outlays that people have in their finances. And I want your kind of red or green. Okay. These paddles have two sides. One is red and one is green. And you're going to tell me, is it worth going into debt for, green, or is it not worth going into debt for, red? Number one, you have a very nice one, an engagement ring. To go into debt for it? Yes, red. Hell no. Hell no. Hell no. Don't go into debt. Get a lab diamond. Get a lab diamond. Green. Green on lab diamond, red on debt.

32:37Nicole Lapin:Invest the difference. Yeah, okay. A two-carat engagement ring, a natural diamond is$20 ,000. grand, a lab-grown diamond is$2 ,500. Invest the difference. $2 ,500. After, you know, 30 years or whatever, it will probably be$300 ,000 better than a natural diamond.

32:56Nayeema Raza:Yeah. The lab-grown will be? No, if you invest the difference. Oh, yeah. Sorry.

33:00Nicole Lapin:If you invest like the$17 ,500.

33:01Nayeema Raza:I thought lab-grown diamonds were like a wild appreciating asset. My God. I got to rename the podcast, Dumb Girl, Smart Questions. Okay. What about your wedding?

33:11Nicole Lapin:Going into debt?

33:12Nayeema Raza:Yeah.

33:13Nicole Lapin:No, same situation. Like the average wedding cost is 35 grand. Yeah. Spend half of that, invest the difference. Again, you'll have 300 grand after 30 years. We had a micro wedding. What's a micro wedding? A baby wedding. A baby wedding. I like the idea of - I was also pregnant. Oh, a shotgun wedding, Nicole?

33:31Nayeema Raza:A shotgun wedding.

33:32Nicole Lapin:A marriage wedding.

33:33Nayeema Raza:That is what the aunties would say at the wedding.

33:35Nicole Lapin:Oh, it is a shotgun wedding. Anyway, it was the best wedding, small, You know, we invested the rest that we didn't blow out.

33:43Nayeema Raza:Yeah. I think one of the greatest things that the pandemic has done is like made more weddings micro and like people are doing the city hall wedding or like a smaller wedding. And I'm like, I'm so down for that. Okay. Homeownership. Going into debt. The debt for home ownership.

33:56Nicole Lapin:Just through a regular mortgage? Yeah. I think it depends. It depends. I'm just agreeing. Sure. If it works for you. Yeah. If it works for you, I'm into it. But you have to answer all the questions and like check the boxes that we talked about.

34:10Nayeema Raza:Okay. Homeowner.

34:10Nicole Lapin:Just not going in blindly. Yeah. And thinking that that's the way to grow wealth. It's one way to grow wealth.

34:16Nayeema Raza:Home renovation.

34:18Nicole Lapin:Are you on HGTV? Like I have questions. If you're on HGTV, it's great.

34:23Nayeema Raza:If you're just a regular person.

34:25Nicole Lapin:And if you're going to stay there forever and ever and you can afford it in your overall financial picture, great.

34:33Nayeema Raza:Or you think you're going to recoup it somehow. You're going to drive up. You're doubling the value of the home by doing this new kitchen splash.

34:39Nicole Lapin:Totally. Some of that is speculative. Okay.

34:42Nayeema Raza:It sounds like you're just giving a green to be generous. What about fertility care? IVF, the journey?

34:49Nicole Lapin:Oh, going into debt for it. It's tricky. yeah probably right yeah I did I did IVF um it's no fun uh but I know how how deeply personal that is so if it's something that you yeah what feel like you need to do then you know there are a lot of ways to get out of debt and uh and you can it's a it's a problem you can deal with later and I

35:20Nayeema Raza:count in that like egg freezing or fertility or adoption or surrogacy, all the things that people might be considering to be able to have a family. It seems like the kind of thing that, okay, feels like there's only so many choices and it's a priority in a certain window of your life.

35:37Nicole Lapin:Yeah. Cause I think when you, when you think about there's two ways that you spend money, right? On impressing other people, consumption and experiences. And there's no greater experience obviously than having a family. And if that's deeply, deeply personal to you, like who the hell am I to put a bad paddle up?

35:57Nayeema Raza:I was going to show you, like we're going to get to some paddles where you actually want to do the green, not your resistant green for homeownership. Your education. I would say, I would say.

36:09Nicole Lapin:It really, it depends if you do the math, if you know the opportunity cost if you really think that it's going to yield a higher return over time, but likely not.

36:21Nayeema Raza:I think that 10 years ago, my answer on this might have been different, but I just feel like where we are with the precipice of AI and like, I see so many people who have dropped out of college, like George Lucas built, you know, everything that he's built from having gone to community college. And I think there's a lot of routes and we kind of overemphasize prestige education in this country. Yeah. So I'm probably going to be a rat on that.

36:45Nicole Lapin:I don't know where people that have hired went to college. I don't think anyone knows where I went to college or cares. Yeah.

36:51Nayeema Raza:I mean, obviously where I went didn't help me know anything about money. So it was too bad. But your kids' education?

36:58Nicole Lapin:No. Going into debt yourself? Always put your oxygen mask on first. They can get student loans. You can't get a loan for your retirement. So when parents will say, well, I'm saving for my kids' education and that's so lovely and I get that as a parent, but only after you've taken care of yourself first. So if you're prioritizing their college and not your retirement and you are desolate when you're older and you're like, I have no place to live. I'm coming over to your house and I'm sleeping on the couch. I have no food. Like that's not helping your kid. So you have to take care of your retirement first.

37:34Nicole Lapin:Do not go into debt for their education.

37:37Nayeema Raza:I'm curious, like, what's the best thing you invested in in your 20s and the worst thing you, quote, invested in in your 20s?

37:44Nicole Lapin:Oh, man. I was not investing in my 20s. That's the problem. I think, you know, no one has ever in the history of the world said, I'm so glad I didn't invest earlier. Like, oh, my God. The reason that I do what I do every single day is because I'm like, please do not make the same mistakes I did. Like, I wish. And I was covering, by the way, on the floor of the stock exchange, like I have a video of me saying like, Google just announced Gmail. You'll never have to delete a single email again. Like why wasn't I not buying Google stock? That was crazy. Or like, I have a video that shows me reporting on the launch of the iPod.

38:21Nicole Lapin:What was I doing? Like, what was I doing? Why was I buying clothes and shoes and whatever? And why was I not buying stocks? I was buying too much stuff and not enough stocks.

38:31Nayeema Raza:Totally agree. And I feel like I've constantly been in that situation where I remember my college boyfriend was like buying oodles of Google and like all these stocks and he was telling me about them and I'm like, I don't know, it seems risky. Now I look at the fact that like Google has like gone up, I don't know, hundreds of X. If Amazon has gone up thousands of X, like 3 ,000 X, it would have been smart to be buying that earlier in life. What about the worst thing you quote invested in, even in your thirties, like something you thought was going to be an investment that paid off and didn't. Yeah.

38:59I, yeah.

39:01Nicole Lapin:Any like designer, anything, I know this is cliche, but yes, I think we normalize giving gifts of stock, not stuff to ourselves and to others. Yeah.

39:12Nayeema Raza:Okay. So you're going to give your daughter stock?

39:16Nicole Lapin:Yeah, of course. She already has stock. She has more money. We were just looking at her portfolio. My daughter is richer than my husband and I were in our twenties and probably in our early thirties.

39:26Nayeema Raza:Because what are, what are three things that people can do if they have a baby that they want to?

39:29Nicole Lapin:She has a 529, which is traditionally thought of as a college savings account, but it is much more flexible. She has a custodial Roth IRA and she has a custodial brokerage. Got it. Oh, wow. She has a whole, like. Your daughter is rich. My daughter is a rich girl.

39:45Nayeema Raza:Is your daughter going to buy us lunch after this? Honestly. We can't. Yeah. It's a jailbreak that money. You're going to pay a lot of penalties. Okay, Naima. Don't you? Nicole is finally impressed by one piece of knowledge. It's like our last five minutes of the interview. I love it. Right? There's a lot of penalties. No? There's some penalties. There's some penalties. Yeah. But sometimes you can do it. Okay. What about health savings accounts? Are those worth it?

40:12Nicole Lapin:For debt? No, just in general. We're done with the paddles. We're done with the paddles. Yeah, I mean, there are a lot of tax-advantaged accounts that I would put my money in first and then go to taxable accounts. So, like, if you look at HSAs, if you look at 401ks, IRAs, or Roth, or a backdoor Roth, you know, a year, a person who's making$100 ,000,$300 ,000 can put about$35 ,000 into those tax-advantaged vehicles. And so once you get those, and by the way, any match is like obviously free money. Half of people say no to a 401k match, which is like saying no to a raise. Yeah, that's dumb. Yeah.

40:53Nicole Lapin:But so do that at first and then like a taxable brokerage account, which is where you can get low cost S &P 500 index funds and the rest of it. And if you want passive income from that, then I like to think of like$50 ,000 a year for every million-ish that you have. So without touching the principle, what you can get as income to live on. It's a good rule of thumb as you're trying to think about passive income. Don't fall into the rabbit holes of the internet that's like, you can do this passive thing. It's so simple and easy. It's not.

41:27Nayeema Raza:One piece of data, by the way, when I was like looking through this, that broke my mind is there's a recent survey of 2 ,000 people who are either like recently engaged, married, or in relationships. And 78 % of people surveyed would rather start married life debt-free than spend on an engagement ring. And I was like, what's up with the other 22 % of people? But it sounds like most people wouldn't. Most people wouldn't, but the number goes down by generation. 70 % of millennials said they wouldn't, and 64 % of Gen Z said they wouldn't go into debt. But it's still the majority, but that's 40 % of Gen Z who might be far away from making that decision, thinking that they would go into debt for a ring.

42:05Nayeema Raza:Lab grown. Lab grown. Invest the rest. Invest the rest. I feel like I put it on a t-shirt.

42:11Nicole Lapin:It's a bumper sticker. Let's go.

42:13Nayeema Raza:The last thing I want to ask you about is when you sit down and you do this naked lunch and you sit with yourself, how do you know if you're rich or poor? What are the milestones that you should have in your mind to really measure that? Because there's the dollar value, but then I think there's like, we're living in a world of vast comparison. Like you're constantly comparing yourself to other people. You're comparing yourself to where your parents were in the generation. How do you know if you're doing well financially?

42:40Nicole Lapin:If you answer the question really honestly with what do you want financially? What's going to make you happy? And for everyone that's different, if you are going to be stoked in retirement, living on a small piece of land with your lawn chair from Target, amazing. Let's stick to that and not change the goalposts on ourselves when we scroll on Instagram and we see like our friend's friend with a yacht and be like, oh my God, I suck at life. Because I think you can have it all, but only if you truly define what it all means and stop changing the definition on yourself mid-game. Because that's when it doesn't work.

43:15Nayeema Raza:Yeah, because as you get more, you expand your possibility set of what you need.

43:21Nicole Lapin:And I think that's why it's really important to work with any trusted wealth advisor that you have. We have these conversations all the time. Like it's, it's nice to have an accountability partner and somebody who's going to keep you honest with what your goals are. You know, people will call and say, well, you know, I want to get this or that or whatever, or why am I not getting this? It's like, hold on. Like we went through like your whole goals and all of the, you know, breakdown of timeline here. That's not what's on there. We can change that. You can always change that, but stay really true and honest to what that looks like for you in your most honest, quiet moment off social media.

43:59Nayeema Raza:Yes. Off social media. And just like kind of in your own room. Like I think my dad, when I was growing up, had this rule, which is like, I'm never going to say no to you, but don't ask me for something I should say no to, which was a good self-regulation for me in asking for things. And, you know, it wasn't mostly financial things. It was like sometimes time things, help with something or whatever. It's like just kind of being self-aware in what I was expecting out of life. And I think sometimes we let go of that. And I had this conversation with Mark Cuban too. It's like, how much money is enough money?

44:30Nayeema Raza:And he said, how much money is too much money? It's like, you can just get caught in a trap of wanting more and more and more and like only make yourself feel poorer as you get richer, which I've certainly seen in some of the billionaires I've covered too.

44:43Nicole Lapin:Yeah. I think having that framework around the passive income that you can make off a portfolio without touching that is a good benchmark to think about like the 4 % rule or the 5 % rule. So that would basically mean for$3 million, that's kicking off 150 grand each year for you to live on. And if that's, is that enough? I don't know. Like only you can answer those questions. You know, if it's not, is it more? Is it less? Do you want 50 grand? And then that's a million dollar portfolio that kicks off that income.

45:15Nayeema Raza:A million dollars to get 50 grand a year. Ish.

45:18Nicole Lapin:Like 800 to, you know, one and a half, depending on like the interest rate that you're getting.

45:23Nayeema Raza:Yeah. Okay. I'm gonna keep working. I'm gonna keep working. I'm not there yet. I end every episode of Smart Girl Dumb Questions asking my much smarter guests, what are they dumb about? What is a question that you have that you've been embarrassed to ask out loud or you've, with some shame, asked your phone recently?

45:36Nicole Lapin:Oh, what's in my, what's in my clod log?

45:40Nayeema Raza:Yeah.

45:41Nicole Lapin:I have, I have so many. I have one that's more serious and relevant to what we're talking about, which is why is it taboo to ask what a person's salary is when it's not taboo to ask within 30 seconds of meeting them what they actually do? Because we're lying to ourselves that that question is not about what their salary is.

46:00Nayeema Raza:Totally. It's complete. So is where you live. Where do you live? And oh, do you, you know, people have all these questions for trying to understand how much money you make. So, okay, I love it.

46:09Nicole Lapin:So just ask that.

46:09Nayeema Raza:So who made that Emily Post type rule?

46:11Nicole Lapin:Yes. Yeah. When did that happen? And I don't like it. And also just asking what you do in the first 30 seconds. I have this one anecdote in one of my books where I was at an event in New York, and there was sort of a group at a financial services thing saying like, where are you from? And I said, Los Angeles. And everybody laughed at me. And they were like, where are you from? Again, they asked. And I kind of got that what they were asking for was what firm am I from? And I was just like, Los Angeles. Because, you know, let's have another conversation about actually getting to know each other as humans.

46:48Nicole Lapin:But anyway, I do agree. The biggest question that I have right now is why do I viscerally, like at my core, want to eat my baby's leg? No, you do not. I want to eat her leg fat. Like I just want to live in her thigh.

47:04Nayeema Raza:This is not carnivorous. You just think it's so cute and chucky. No, no, no, no, I'm not. But there's a thing.

47:08Nicole Lapin:Like, why do mothers want to eat their babies? No, I don't know.

47:13Nayeema Raza:I have to get out of this. I'm afraid for my own life. Some army hammer shit is going down.

47:20Nicole Lapin:It's the smell of the baby. Like, I want to just like gnaw on her fat leg. And it's like that? It's just that? It's not her arm? It's mostly her fat leg, her fat arm too. Like, I just, like, I truly, why do mothers want to bite on their children? What's the number for child protective services?

47:38Nayeema Raza:I know you love her so much. It is so cute. Like kids are so cute. And they're like chubby, chubby, chubby cute. Here's a question I have. Do chubby kids become skinny adults and skinny kids become chubbier adults? I have this theory, but I don't know if it's true.

47:52Nicole Lapin:Well, I thought our daughter was getting too skinny because the leg fat rolls were disappearing. Much to my chagrin. And so I was like, we need to fatten her up.

48:04Nayeema Raza:Okay. Fatten her up. She's already rich. she can buy some food. We can get her some food. It sounds like she's a little less.

48:09Nicole Lapin:Stop her lack of food. I know. She takes her height after her father, thankfully. She's lengthening out. And the pediatrician was like, her parents are not, don't have fat rolls on their legs. It's like, fine. She doesn't.

48:21Nayeema Raza:He's like, no, give me back the fat rolls. I must eat a small fat roll. I love it. I want to meet your daughter. I am not going to eat her, but. Thank you so much for doing this. Thank you so much.

48:36Thank you.